Bank Deals Weekly Summary for March 22, 2008

It didn't take long for banks to respond to the Fed's 75-basis-point rate cut. Many online banks slashed their rates this week. Some of the major ones include ING Direct, HSBC, E-LOAN and WaMu. With the Fed funds rate at 2.25%, I'm afraid savings account rates are starting to fall below 3%. Emigrant Direct's savings account is one of them. The rate fell from 3.30% to 2.75% APY which is now even lower than the rate that Emigrant Direct offered when it first launched at the start of 2005.

The Best Savings Accounts?

There are still seven savings accounts with non-promo rates at or above 4% APY. Century Bank Direct is one of them. Its savings account rate did drop this week, but its rate remains near the top with a yield of 4.01% APY. Out of these seven top savings accounts, four are from institutions that have a history of top rates for over a year. These include Countrywide, Corus Bank, OneUnited and Alliant Credit Union.

Countrywide has the best online savings account features, but with Countrywide's problems and with the pending Bank of America acquisition, there's some uncertainty with Countrywide. Even if the acquisition goes through, you have to wonder if this savings account will remain competitive. (see account review).

Corus Bank used to peg its money market account rate to T-Bill yields. This had kept it competitive until last year when the credit crisis started and T-Bill rates plummeted. Corus ended the T-Bill indexing, and the rates became competitive once again. Unlike Countrywide, Corus' money market account offers checks. On the downside, it lacks an ACH transfer system and it has a monthly fee if the balance falls below $10K (see account review).

OneUnited had kept its savings account rate at 5.30% APY for all of last year, and it didn't start dropping the rate until last month. It also has an ACH transfer system. The main problem with this bank seems to be bad customer service. Many readers have reported trouble in trying to reach the customer service. Also, the account opening process is very slow (see account review).

Alliant Credit Union's savings account rate never reached 5% but it has remained competitive over the last couple of years. The rate was 4.85% APY for all of last year, and now it's near the top with a yield of 4.35% APY with only a $100 minimum (see credit union review).

CD Rates Update

Like savings account rates, CD rates were slashed this week. Alliant Credit Union lowered its CD rates, but they're still very competitive. The top yields for terms of 12 to 17 months fell from 4.90% to 4.40% APY.

Indymac Bank actually raised its 12-month and 18-month CD rate. The new yield is 4.15% APY (up from 4.05%). Unfortunately, all of its other CD terms now have very low yields (see account review).

Like Indymac, Countrywide cut its short term CD rates and raised its 12-month CD rate which is now at 4.20% APY (see account review).

For long term CDs, National City Bank still has the best deal. It again extended its 5.00% APY 4-year CD special for another week. Its 4.00% APY 2-year CD was also extended (see account review).

Indymac, Countrywide and National City have all been hit by the credit crisis, so be sure to keep deposits under the FDIC limits.

Reward Checking Accounts

The big reward checking account news this week was the rate cut at State Bank of Toledo. The rate fell from 5.01% to 4.01% APY. State Bank of Toledo had offered a yield of 6.01% APY nationwide with no balance cap during the second half of last year. In December it lowered the rate to 5.01% APY and added a $70K balance cap. Reward checking accounts with smaller caps like $25K have been able to maintain the high rates. I still have six reward checking accounts with yields around 6% APY. One has a $50K balance cap; another has a $30K cap, and the remaining four have a $25K cap. So hopefully, this will help these accounts keep the high yield. I wouldn't be surprised if we do see some cuts. Provident Credit Union launched its reward checking account last summer with a 6.01% APY and a $25K cap. In the last three months, the yield has dropped to 5.01% APY. So I would be surprised if any of these 6% accounts keep the 6% yield for all of this year. My hope is that they'll at least maintain rates 2% above the online savings account rates. For the list of these nationwide reward checking accounts, please refer to my list below.

I found a few more reward checking accounts this week (see recap below). Unfortunately, these are only local deals.

Rates will likely continue to fall so please check with the institutions to make sure the rates that I've posted are still available. If they're not, please leave a comment.

The rates listed below are based on Annual Percentage Yield (APY). No minimum balances are required unless noted. MMA next to the rates indicate a money market account. Most MMAs have check writing and ATM cards. Online savings accounts usually lack both of these. The top lists include banks and credit unions with broad availability and with minimums around $10K or less. Previous weekly summaries are available for Mar 15th, Mar 8th, Mar 1st, Feb 23rd, Feb 16th, Feb 9th, Feb 2nd, Jan 26th and Jan 19th.

There is no way any legitimate bank of credit union or financial organization can pay 7% on an "insured" account. Just can't do it. Only a risk investment can pay 7% on big money. Sure, a bank could pay 7% if there was a balance cap or if it was for a very short term.

You know it is a scam since he is requiring that you email him for more information.

If there was a legitimate 7% insured deal out there, the great Banking Guy would have it explained on his site.

LuckyCharm makes a point, but...wrong in my case.1. not spammer, not dishonest2. yes insured: Money Market/CD + bonus cash3. not listed on website; since when is this evidence of non-existance?4. Banking Guy rules; but no one on this site knows this deal, except for those who got details from me5. one already posted explanation here after getting it from me; again, take my word for it: it's not cool in this particular case. Just get info and get it done. After you succeed - post details, if you deem so better; but not before doing it6. only caveat is offer is close to expiry; those who can - do, those who can't - talk. This happens to be a case when talking too much is counter-productive, take my word for it and do it if you have at least 30k unconditionally liquid; if you don't, look elsewhere7. if I were "craving for attention", I'd be posting details - like some of those who get them from me. But this is not cool in case of this particular deal

Why do you folks continue to bash me. Was I right on interest rates a year and a half ago? Yup. But, you say, 5.75% is "lame." I thought the point was to get the best insured deals herein. You bash me for advocating buying financial equities several days ago, then they go up, up, up (as I predicted), since even the astute New York Times business pages this weekend concurs they were WAAAY oversold.

OK, for all you doubters, try buying a homebuilders equity ETF (XHB will do nicely). I bought at 16 and sold at 21, but it might still have legs.

What good are good calls if you can't call them good calls. That's a question, a rhetorical question, I guess.

Look at the ads in the New York Times Business section for mutual funds "beat the Lipper average 5 years running . . ."). I didn't invent this stuff.

I still say, any yield over 5% is a gift, a GIFT, since your retirement plan ought to deplete the fund by 4%/annum, which is a recognized conservative depletion by endowments. So, if you make, on average, 5%, and withdraw, on average, 4%, you will have very, very, happy children. When you die.

In the financials on St. Patrick's day. March 17. If you don't believe me, go look it up. I told you doubters to load up on financials, and I got bashed. Those who traded with the Bozo made a buncha buncha. Those who bashed me and sat on the sidelines made nada nada.

OK, I missed on the Bear Stearns arbitrage debacle, but I was not about to throw money at the sharks.

I am conservative, not dumb. $2 can go to $10; it can also go to zero.

I still say financial and homebuilder ETFs are the way to go. Even with the run-up, they are WAAAY over-sold. You gotta have a long horizon, but anything over 5% (I know, I am boring you).

Nothing wrong with you financial strategy, if it works for you, accept that you may be posting on the wrong site.

Most of us that follow this blog are here to keep up on the latest savings and CD rates, thanks to Banking Guy, not for market trading information. There are many, many other sites that spectialize in market timeing and trading. And that's where you should be. Anybody could call the shots after the fact.